With his signature in a Rose Garden ceremony, Clinton guaranteed an election year tax argument between Republicans and Democrats as they fight for control of the White House and Congress.

''At a time when America is moving in the right direction,'' the president said, ''this bill would turn us back to the failed policies of the past.'' Republicans shot back that taxes are too high and that Americans deserve a break. House Speaker Dennis Hastert, R-Ill., said it was ''kind of a sad day.''

Clinton signed the veto message on a wooden desk on a warm, sunny autumn morning, before an audience of Cabinet members, White House staff and Democratic allies from health and minority groups. The Marine Band's brass quintet entertained the crowd with George Gershwin's ''Summertime'' and other melodies.

After months of White House warnings, there was no suspense about Clinton's veto, the 26th of his presidency. With Congress struggling to adjourn by Oct. 29, it appeared highly unlikely that Republicans would accept Clinton's suggestion to send him a smaller tax bill, in the $300 billion range that he had proposed.

Senate Majority Leader Trent Lott, R-Miss., said Congress would look at another tax package next year. Hastert said the GOP would not give up on tax relief but ''it may be later and not sooner'' -- suggesting that Republicans would rather take the issue to the voters in next year's elections than compromise with the president. The White House said GOP presidential candidates -- Republican front-runner George W. Bush, in particular -- should say whether they agree with their leaders in Congress.

The Republicans' bill, over 10 years, would reduce all income tax rates by 1 percentage point, ease the marriage penalty on many two-income couples, eliminate estate taxes and the alternative minimum income tax, reduce capital gains taxes, expand pension and 401(k) laws and provide numerous business tax breaks.

Clinton said the GOP measure would undermine efforts to shore up the Social Security and Medicare programs, to reduce the national debt and to improve education. ''The bill is too big, too bloated, places too great a burden on America's economy,'' the president said.

''It would force drastic cuts in education, health care and other vital areas,'' Clinton added. ''It would cripple our ability to pay down the debt. It would not add a day to the Social Security trust fund, it would not add a day to the Medicare trust fund or modernize Medicare with prescription drug coverage.''

Republicans disputed the president and said he had killed tax relief for families, for education and for low-income Americans. ''I regret the president has stolen this tax cut from working American families,'' Lott said in a remark echoed by GOP colleagues.

GOP leaders said they would now concentrate on fixing Social Security, preventing $248 billion in tax increases urged by the administration over 10 years, restraining the growth of government and reducing the debt.

Although prospects for broad tax cuts are dim, House Republicans plan to begin moving a measure Friday that would renew several expiring tax credits, including a research and development credit popular with high-tech industry and manufacturers.

The GOP package, which carries a one-year cost of about $3 billion, also would extend a provision preventing personal credits, such as the $500 per-child tax credit, from counting toward a taxpayer's eligibility for the alternative minimum tax -- a tax that often is higher for middle-class people.

Clinton's veto ceremony was the final act in a months-long political drama. The Republican-controlled Congress completed action on the tax bill Aug. 5 but did not send it to Clinton for his promised veto, using the time to try to rally support. But with Americans enjoying economic prosperity, the GOP publicity blitz failed to produce a groundswell of voter support.

Chiding Republicans, Clinton said that ''many in Congress seem ready to throw in the towel'' after his veto. ''That would be a disservice to the American people. They sent us all here to get things done.'' He challenged Congress not to go home until it reaches agreements with the White House on Social Security, Medicare, debt reduction and education.

''If we can work together to meet these objectives,'' he said, ''we can also work together to pass tax relief we can afford.''

Vice President Al Gore, seeking the Democratic nomination for president, passed up the White House ceremony for a meeting in New York with South African President Thabo Mbeki. Democratic congressional leaders also did not participate.